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Water Utilities Department
Overview of Proposed FY11 - 12 Budget
August 22, 2011
This Page Left Blank
33
Purpose
This briefing provides an overview of Dallas Water Utilities’ recommended FY11-12 Budget
44
Dallas Water Utilities: FY11-12 Budget Focus
Dallas Water Utilities is a large, municipally owned regional water/wastewater supplier
Costs are driven by infrastructure requirements for both growth and renewal
Responsibility for planning to meet water requirements for service area
Self-supporting
Proposed budget continues the focus on maintaining infrastructure and conserving resources through:
Water and wastewater systems maintenance
Pro-active detection of water system leaks
Water conservation efforts
Annual replacement rate of 1.5% for aged water and wastewater mains
55
Dallas Water Utilities
The Proposed Budget includes Operating Budget of $551.6M and Capital Budget of $276.7M
Overall retail rate increase of 5.9%
Continue to provide high quality and sufficient water/wastewater services to meet current and future customer needs
Continue Water Conservation Program to reduce per capita water consumption
Provide wholesale water and wastewater services by contract based on cost of service. On average, wholesale customers retail rates are 12% higher than Dallas
Future Considerations
Operational outlook
Drought conditions
Required restriction in water treatment capacity due to East Side Water Treatment Plant expansion and associated water quality improvements
Estimated retail rates outlook
FY2013 7.3% increase
FY2014 6.9% increase
66
Dallas Water Utilities is funded from water and wastewater revenues and receives no tax dollars
Approximately 1,500 employees
Population served (treated water)
1.2 million - City of Dallas
1.1 million wholesale customer cities
699 square mile service area
306,000 retail customer accounts
5,130 miles of water mains
4,340 miles of wastewater mains
3 water treatment plants
2 wastewater treatment plants
Wholesale customers
23 treated water
3 untreated water
11 wastewater
City of Dallas Water Utilities Fact Sheet
77
Surface water is “owned” by the State of Texas, who in turn, grants permits for its beneficial use
Dallas’ existing water rights were granted by the State based on serving the needs of Dallas and its customer cities
Both Dallas and customer cities enjoy lower water rates because of a regional approach to water acquisition and supply
Dallas has had a successful relationship with its customer cities for more than 50 years, and has shared costs with customer cities based on a 30-year Memorandum of Agreement (MOA)
FY12 budget includes wholesale rate increase of 3.2%
Dallas currently has water to meet its needs, but even with conservation and reuse, additional water supply sources will be needed by 2035
Dallas and other area water agencies are looking for additional water sources to meet projected needs through 2060
Regional approach for new water sources is more efficient and reduces costs
Since Senate Bill 1 was passed in 1997, Dallas has been part of the Region C Planning Group, which includes a 16 county area
Where We Are Today
88
DALLAS WATER SERVICE AREA
DALLAS
LAKE RAYHUBBARD
LAKETAWAKONI LAKE FORK
RESERVOIR
LAKE PALESTINE
LEWISVILLELAKE
GRAPEVINELAKE
RAY ROBERTSLAKE
ELMFORKWTP
BACHMANWTP
EASTSIDEWTP
IRONBRIDGEPUMPSTATION
FORNEYPUMPSTATION
TAWAKONIBALANCINGRESERVOIR
INTAKE & PUMPSTATION
INTAKE & PUMPSTATION(FUTURE)
GRAYSON
COLLIN
COOKE
DENTON
DALLAS
ELLIS
TARRANT
JOHNSON
KAUFMAN VAN ZANDT
HENDERSON
WOOD
SMITH
ROCKWALL
HUNT
HOPKINSRAINS
WISE
Existing Water Treatment Plant
DWU Water SourcesFuture Water Sources
Future Water Treatment Plant
LEGENDExisting FacilitiesFuture FacilitiesExisting PipelineFuture Pipeline
28apr10
FANNIN
HUNT
PROPOSEDDWU / TRWDINTEGRATED PIPELINE
CEDAR CREEKRESERVOIR
JOE POOLLAKE
Other Reservoirs
LAKECHAPMAN
NTMWD / IRVING PIPELINE
DELTA
HOPKINS
99
Utility Overview
Capital intensive operation with assets of over $4.8B including:
Water Supply-$0.5B
Treatment Plants-$1.5B
Water/Wastewater Pipeline-$2.8B
Utilize 10 year capital improvement program (CIP) supported by system master planning
Use Financial Management Performance Criteria (FMPC), including:
Dallas Water Utilities funds solely for use of the utility
Commercial Paper used for interim financing of capital projects
Long-term debt used only for capital infrastructure (30 year debt)
Debt service coverage should be at least 1.3 times at all times and 1.5 times at fiscal year-end
Customer cities rates based on 2010 MOA and contractual agreement
Strict adherence to TCEQ/EPA regulations
Lewisville Lake and DamLake Fork Pump Station
1010
As of 8/15/11 FY11 consumption is 3% or 5.3 BG below FY11 Budget.
Dallas Water Utilities SystemDaily Water Consumption (FY11 Budget and 5 Year Average)
200
300
400
500
600
700
1-O
ct
16-O
ct
31-O
ct
15-N
ov
30-N
ov
15-D
ec
30-D
ec
14-J
an
29-J
an
13-F
eb
28-F
eb
15-M
ar
30-M
ar
14-A
pr
29-A
pr
14-M
ay
29-M
ay
13-J
un
28-J
un
13-J
ul
28-J
ul
12-A
ug
27-A
ug
11-S
ep
26-S
ep
MIL
LIO
N G
ALL
ON
S
5 Year Avg FY11 Budget
FY10/11
1111
Sustainability Actions
Dallas built its water system to meet the drought of record
The drought of record is the worst recorded drought used for planning municipal water supplies
Dallas’ drought of record was a seven year period in the 1950’s
To minimize water usage, Dallas has undertaken several sustainability actions
Leak detection
Maintenance and repair
Conservation and reuse
Actions are to sustain what we have, and add new sources to meet future growth
1212
Sustainability Initiatives
Major Maintenance Initiatives
Continuing to reduce water loss by expanding leak detection program
Unaccounted For Water was 9.7% for FY10 and 9.6% year to date for FY11 with an industry goal of 10%
Increased large wastewater main assessment and replacement
Maintains an annual replacement rate of 1.5% for aged mains
Focus on Infrastructure Rehabilitation and Maintenance
For the prior four years, approximately half of the Capital Program went for the maintenance of existing infrastructure
For FY12, $164.5M of the $276.7M capital program is budgeted for water/wastewater main replacements and infrastructure rehab
Dividends from enhanced conservation initiatives
36 MGD savings in water from 2001 to 2010
Equates to 76% of the 47.4 MGD goal for 2060
Reuse Initiatives – 88 MGD identified in current efforts
Working with other agencies for reuse water
40 MGD to Lake Ray Hubbard
48 MGD to Lake Lewisville
Cedar Crest golf course (less than 1 MGD), and Stevens Park under construction
13
Dallas’ Water Supply
Dallas’ plan is to have enough water during a drought equal to the 1950s drought of record
Dallas’ planned new water supply sources are based on:
Costs – capital construction and power
Efficiency
Environmental impact
Likelihood for development
Water located closer to the City is generally less expensive
Lower infrastructure costs due to shorter pipelines
Lower pumping (energy) costs – a recurring, annual expense
Close-in water has been 100% allocated by the State
Future water will be farther away and much more expensive
Working with other area water providers to achieve greater economies of scale in an effort to reduce costs
14
Economic Impacts of an Inadequate Water Supply
If water is unavailable, State’s 2060 estimates for Region C, including Dallas:
Population reduced by one million (7%)
Employment off by 700,000 jobs (17%)
Income shrinks by $58.8 billion (21%)Lake Tawakoni 2006, (down 12.6 feet);
currently down 5 feet
Ray Roberts Lake during 2000 drought (down 17.1 feet);currently down 3 feet
Providing sufficient water comes at a price:
Even with $200M in savings from regional participation in the Council adopted IPL project, it will cost Dallas approximately $1B to connect Lake Palestine
Plan is to spread costs out 10+ yrs
Results in annual rate increases
FY11-12 Proposed Operating Budget
1616
2012 Budget Provides the Following Services
157.6 BG of water treated and delivered
70.0 BG of wastewater treated
Capital Improvement Program of $276.7M
Continuation of plant expansion at Eastside Water Treatment Plant and replacement of aged water and wastewater mains
Meets all Financial Management Performance Criteria
Meets all State and Federal water and wastewater quality requirements
Continues conservation initiatives to reduce water use
1717
Major Expenditure Impacts
Recommended Expenditures of $551.6M
Integrated Pipeline Project to connect Lake Palestine - $3.8M
Capital Funding increase - $10.9M
Revenue bond sale of $185M Spring 2012
Last year of PILOT phase-in from 90% to 100% - $3.1M
Conservation program additions - Industrial, Commercial and Institutional (ICI) customers incentives and training - $1.3M
Other O&M costs, including full year funding for leak detection and repair crews and operations for Lake Fork Pump Station - $1.4M
1818
FY 12 Capital Budget Funding
Proposed Capital Budget of $276.7M funded by:
Cash Transfer - $70.1M
Commercial Paper (CP) for interim financing
Lower interest rates
Greater financing flexibility
Revenue bond debt
Approved by City Council
Used to pay off short term debt (CP)
30 year term
Meets all FMPC requirements
Bond Coverage budgeted at 1.61
Equity Funding of 25% Lake Fork pipeline construction
19
FY12 Capital Improvement Program
Capital Improvement Program (CIP) of $276.7M
CIP includes projects categorized as:
Rehab and Replacement $164.5M
Regulatory $68.2M
Growth $44.0M
Major FY12 projects include:
Pipeline Program - $80.6M
Construct 57 miles of pipeline as part of the replacement, relocation, growth, and private development programs
Elm Fork Improvements - $49.7M
Replace and renew obsolete and deteriorated equipment for improved reliability and efficiency
Clean sludge lagoons to ensure uninterrupted water production
Construct new Chlorine containment facility to secure long-term safety and reliability of the plant
2020
FY12 Capital Improvement Program
Major FY12 projects include:
Central WWTP Improvements - $44.1M
Rehabilitation of grit removal equipment at both Dallas and White Rock headworks to improve overall efficiency and reliability
Replace obsolete electrical infrastructures for improved reliability – transformers, high voltage cables, and switchgears
Renewal of badly deteriorated diversion structures to minimize the risk of sewer overflows and to improve flow diversion between plants
East Side WTP Expansion and Improvements - $29.0M
Filter media replacement and hydraulic improvements for meeting treated water regulations and reduced backwashing frequencies
Construct new electrical substation and distribution system to supply sufficient power to meet the 540 MGD plant expansion needs
Southside WWTP Improvements - $9.6M
Rehab and replace obsolete and/or deteriorated equipment and instrumentation for improved reliability
2121
FY12 Proposed Retail Revenue Requirement
Proposed FY12 Budget $551,600,305
Preliminary Revenues at Current Rates
($525,827,810)
FY12 Preliminary Additional Revenue Requirement
$25,772,495
= 5.9%* Proposed Retail Rate Increase
* A 7.4% preliminary rate increase was identified in the August 2010 Future Outlook Briefing to Council
Retail Rate Impact
2323
Note: 85% of residential customers will see an average monthly bill increase of $4.14 or less. Data based on January 2010 through December 2010 usage.
Impact of Proposed Rate Adjustment to Residential Water and Sewer Bills
a Average water and sewer use: 2,271 gallonsb Average water use 6,497 gallons and sewer use: 6,400 gallonsc Average water use 12,087 gallons and sewer use: 6,400 gallonsd Average water use 30,308 gallons and sewer use: 6,400 gallons
Customer Usage in RangeAverage Bill at Current Rates
Proposed Average
RatesProposed Increase
% Increase
Number of Customers Impacted
% of Customers in Range
0 to 4,000 gallons $21.52 $22.56 $1.03 a 4.8% 73,876 31.3%
4,001 to 10,000 gallons $50.02 $52.84 $2.81 b 5.6% 98,507 41.8%
10,001 to 15,000 gallons $70.10 $74.24 $4.14 c 5.9% 27,702 11.8%
Above 15,000 gallons $171.49 $183.40 $11.90 d 6.9% 35,661 15.1%(Includes conservation tier rate)Total 235,746 100.0%
2424
Impact of Proposed 5.9% Rate Increase
Typical monthly residential water and wastewater bill would increase from $55.69 to $58.87
Based on water use of 8,300 gallons and 6,400 gallons Winter Months Average for sewer
US EPA affordability guideline for wastewater bills is 2% of median income
Dallas’ wastewater bills would be 1.7% of median income
Future Outlook
26
Future Forecast Considerations
Continued maintenance of water and wastewater systems
Trends in power, fuel, chemicals and contracts with others
Trends in water sales, conservation and the weather
Implementation of the Integrated Pipeline Project
Implementation of master plan and major maintenance recommendations for capital improvements program (CIP)
Forecasts will change as numbers are refined
Five Year Capital Improvement Program
2828
Basis for Capital Planning
CIP includes three major categories:
Regulatory
Projects initiated due to changes in regulation by the Federal, State, or local governing agencies in regards to treatment processes, security issues, power reduction, air quality, dam safety, building codes, etc.
Growth
Projects identified in master planning efforts as required in anticipation of growth demands and projects in support of private development needs.
Rehab and Replacement
Projects requiring renewal of existing infrastructure or equipment that are beyond their useful life and causing operational inefficiency, costly maintenance, or repeated failure that negatively impacts customer service delivery. This category also includes replacement of pipelines in concert with proposed paving projects.
29
Capital Program Development
Major capital improvements are guided by master plans and consider:
impending legislation for regulatory impact
population growth patterns
usage and demand patterns
scheduled maintenance
5 and 10 year Capital Program projections are developed to prioritize and schedule projects enabling the City’s water and wastewater systems to operate efficiently and economically
Council approves Capital Program funding annually as part of the budget process
Capital Program is typically funded by a combination of cash and debt
3030
FY12 - FY 16 Capital Improvement Programs
FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 Total
Regulatory $68.2M $51.1M $28.0M $40.6M $4.6M $192.5M
Growth $44.0M $65.7M $22.6M $32.1M $150.9M $315.3M
Rehab and Replacement $164.5M $195.5M $305.9M $244.1M $162.5M $1,072.5M
Total $276.7M $312.3M $356.5M $316.8M $318.0M $1,580.3M
3131
Future Outlook: Capital Improvement Program (Amounts in Million Dollars)
Note: Does not include cost of additional future water supply acquisitions
0
50
100
150
200
250
300
350
400
FY12 FY13 FY14 FY15 FY16
3232
FY12 - FY 16 Capital Project Systems
Raw Water Supply, Reservoirs, Dams, Pumping, and Transmission - $82.1M
Rehab Iron Bridge Pump Station to improve reliability and increase capacity
Repair Carrollton, California Crossing, Frasier, and Bachman Dams to meet safety regulations
W & WW Pipelines, Pump Stations, Storage Facilities, and Meter Vaults - $589.2M
Continue replacement of deteriorated infrastructures and pipelines
Continue building new infrastructures to support development and growth demands
Elm Fork Water Treatment Plant Improvements - $343.7M
Complete all water quality projects to convert to enhanced coagulation and biological active filtration to meet regulatory requirements
Sedimentation basin conversion to enhanced coagulation
Filter backwash and solids handling to facilitate biological active filtration
Modification to chemical addition lines and facilities – ammonia, chlorine, orthophosphate, ferric sulfate
Sludge handling improvements
Rehab deteriorated pump station #1 for improved reliability
3333
FY12 - FY 16 Capital Project Systems
Bachman Water Treatment Plant Improvements - $58.1M
Complete all water quality projects to convert to enhanced coagulation and biological active filtration to meet regulatory requirements
Chemical rapid mix improvements to optimize chemical addition and settlement of floc
Modification of ammonia and chlorine addition feed points eliminate nitrification and improve water stability and pH control
Sludge lagoon cleaning
Rehab of pump station #1
Eastside Water Treatment Plant Improvements - $166.9M
Complete all water quality projects to convert to enhanced coagulation and biological active filtration to meet regulatory requirements
Sedimentation basin conversion to improve water stability
Filter/hydraulic improvements to optimize organics removal causing nitrification
Residuals recovery to improve overall plant efficiency and eliminate recycling of filter backwash
Complete 540 MGD plant expansion
Construct Stage 4 sedimentation basins to meet future demands
Construct Stage 5 filters to increase plant capacity and meet future demands
3434
FY12 - FY 16 Capital Project Systems
Southside WW Treatment Plant Improvements - $94.8M
Build new peak flow basin #5 and rehab peak flow basin #’s 1, 2 &3 to better manage wet weather flow events
Construct new grease digestion facility to maximize co-generation facility to increase power generation
Replace deteriorated grit removal system with more efficient system to reduce power consumption at the plant
Hickory Creek Interceptor Improvements
Central WW Treatment Plant Improvements - $179.6M
Rehab badly deteriorated primary clarifiers to extend the life of the facility
Rehab deteriorated White Rock pump station to improve reliability
Construct new peak flow basin D to increase storage capacity and better manage wet weather flows
Construct stormwater facilities to eliminate run-off and eliminate flooding at the plant
Construct chemical feed polishing facility for enhanced biological phosphorus removal to meet regulatory change
3535
Future Outlook: Retail Rate Increases
Note: Dallas Estimated Share of IPL project is $832M; with estimated capital savings of $196M
3636
Summary
Dallas Water Utilities is a large, municipally owned regional water/wastewater utility provider
Self-supporting
Costs are driven by infrastructure requirements for both growth and renewal
Responsibility for planning to meet water requirements for Dallas and service area
Recommend Proposed Operating Budget of $551.6M
Average retail rate increase of 5.9%
Typical bill increases $3.18/month
Recommend Proposed Capital Budget of $276.7M
Budget increase primarily driven by increases in debt to fund capital projects
APPENDIX
3838
Services by Key Focus AreasService FY 11 Budget FY 11 Estimate FY 12 ProposedNumber as of June FTA Budget
Economic Vibrancy2.61 Water Capital Funding 252,754,883$ 235,983,531$ 267,111,055$ 2.62 Water Production & Delivery 100,404,142$ 98,575,150$ 100,886,708$ 2.63 Water Utilities Capital Program Management 13,213,687$ 12,930,406$ 13,464,228$
Clean Healthy Envirornment3.36 Wastewater Collection 16,477,259$ 16,419,676$ 16,758,918$ 3.37 Wastewater Treatement 48,411,040$ 48,153,595$ 48,796,287$ 3.39 Water Conservation 5,391,708$ 5,388,834$ 6,607,759$
E3 Government6.71 Water Planning, Financial and Rate Services 3,244,995$ 2,757,552$ 3,160,024$ 6.72 Water Utilities Customer Account Services 21,471,647$ 21,281,672$ 21,543,938$ 6.70 Vital Statistics -$ -$ -$ 6.73 DWU General Expense 69,870,934$ 68,749,905$ 72,859,818$ 6.21 City GIS Services 100,202$ 18,235$ 411,570$
Totals 531,340,497$ 510,258,556$ 551,600,305$
39
Components of Water Utilities RevenuesInterest Income $ 4.0M
Interest earned on cash in various department funds
Other Fees & Charges $ 4.7MIncludes full cost recovery for miscellaneous fees and charges such as permits and cross connection fees
Wholesale Sales $ 82.5MRevenue earned from sales to wholesale customers for treated water, untreated water and wastewater services
Retail Sales $460.4MRevenue from sales to retail customers for water and wastewater services including residential, commercial, industrial and municipal
Total Revenues $551.6M
Retail Rates
4141
42
Proposed Miscellaneous Fee Changes
Existing Proposed Fee Fee
Applications& Deposits 1. Service Application Fee $13 $15
Charges for Use of Fire Hydrants 2. Monthly Fire Hydrant Service Charge $55.68 $59.18
4343
Index Cities Comparison of Average Monthly
Water & Sewer Residential Bills
Note: Bill comparison based on rates effective June 2011; water consumption of 8,300 gallons; and, 6,400 gallon Winter Months Average for sewer
$ 34 .59
$ 42 .74
$4 3 .9 1
$4 6 .0 3
$ 53 .71
$5 5 .6 9
$ 56 .53
$5 8 .2 3
$5 8 .8 7
$6 0 .3 7
$6 0 .6 9
$6 4 .7 5
$6 8 .1 0
$7 8 .2 1
$ 93 .65
$ - $1 0 $2 0 $3 0 $4 0 $ 50 $ 60 $ 70 $ 80 $ 90 $1 00
E l P aso
P hoe nix
D e tro it
S an Anton io
B altimore
D allas C urre nt
Fort Worth
Arlington
D allas P ropose d
P lano
P hilade lphia
H ouston
G arland
Austin
S an D ie go
4444
Customer Cities Comparison of Average Monthly
Water & Sewer Residential Bills
Note: Bill comparison based on rates effective June 2011; water consumption of 8,300 gallons; and, 6,400 gallon Winter Months Average for sewer
$44.34$45.50
$48.35$49.57
$53.23$53.98$55.69$57.39$58.00$58.02$58.44$58.48$58.87$60.27$61.54$62.20$63.26
$67.13$67.24$68.19
$72.98$77.12$77.43$78.31
$80.48$90.33
$- $20 $40 $60 $80 $100
CarrolltonIrving
RichardsonFarmer's Branch
LewisvilleCoppell
Dallas CurrentDuncanville
WilmerSeagoville
AddisonDesoto
Dallas ProposedGrand Prairie
DentonCockrell Hill
MesquiteThe Colony
University ParkHutchins
Balch SpringsFlower Mound
LancasterCedar Hill
Highland ParkGlenn Heights
Water Conservation Program
4646
Dallas’ Water Conservation Program
Conservation measures adopted by the City Council in Oct 2001 have been positive
Added 4th tier water rate for usage over 15,000 gallons
Passed an ordinance regulating lawn and landscape irrigation:
Avoiding water runoff and waste
Maintaining sprinkler systems
Summer daytime watering restrictions from June 1 to September 30 annually
No watering during any form of precipitation
Installation of rain and freeze sensors by 2005
In 2007, the City extended the time of day watering restriction to April 1 through October 31
Dallas continues to aggressively pursue conservation strategies
25% of future water will be met by conservation and reuse
4747
Water Conservation Five-Year Strategic Plan 2010 Update
City’s long-term planning tool to help curb water waste and improve water efficiency management
Serves as foundation for state mandated water conservation plan
Strategies include projected long-term water savings and reductions in gallons per capita usage
Updated plan adopted by the City Council in June 2010
4848
Dallas GPCD Trends
Over 120 billion gallons saved since 2001
Water Supply
51
DALLAS WATER SUPPLY SYSTEM CONNECTED RESERVOIRSLewisville Ray Roberts Grapevine Ray Hubbard Tawakoni Lake Fork
Historical Dallas Drought vs. Current Drought
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
02-2010
04-201006-2010
08-2010
10-201012-2010
02-201104-2011
06-2011
08-201110-2011
12-2011
02-201204-2012
06-2012
08-201210-2012
12-2012
02-201304-2013
06-2013
08-201310-2013
12-2013
02-201404-2014
06-2014
08-201410-2014
12-2014
02-201504-2015
06-2015
08-201510-2015
12-201502-2016
04-2016
06-201608-2016
10-2016
Dal
las
Res
ervo
ir C
apac
ity (A
cre
Feet
)
1950 Record Data
Current Data
Stage 1 - 35% Depleted
Full
Stage 2 - 45% Depleted
Stage 3 - 55% Depleted
Stage 4 - 70% Depleted
Recommended